Trump threatens 20% tariff on EU cars

Tariffs on more than $3 billion worth of American exports to Europe took effect on Friday.

Earlier, China underestimated President Donald Trump's resolve to move forward with tariffs unless Beijing changes its "predatory" trade practices, a top U.S. trade advisor said on Tuesday, in comments that diminished the chances of a negotiated settlement to a looming trade war between the world's economic superpowers.

Harley (HOG) says it is getting hit by tariffs twice: Once by the European Union import duty and once by a rise in raw material prices resulting from US steel tariffs. But President Trump on Friday indicated he is aiming specifically at auto imports from Europe.

President Donald Trump threatened Friday to slap 20 percent tariffs on European cars in retaliation for tariffs that the European Union imposed on the U.S.in retaliation for an original set of tariffs that the US imposed on global steel and aluminum imports.

The tweet appears to contradict a statement made by Commerce Secretary Wilbur Ross at a Senate Finance Committee hearing on Wednesday.

"We tried to get the current model to Europe as quickly as possible, as far as production allowed for it", Arnezeder said. That investigation is ongoing, but Ross told a conference on Thursday he expects the national security investigation into automobiles to conclude by late July or August. Most of the units imported from Germany are premium cars, which tells a lot about the position of American auto industry in the premium market.

During his presidential campaign, Trump promised to apply tariffs, saying countries around the world had been exploiting the U.S. If the trade dispute continues or is not resolved by the WTO, the European Union could target a second batch of American exports worth around €3.7 billion ($4.3 billion).

The EU's retaliatory tariffs against the United States came into force this morning, affecting products such as bourbon whiskey, jeans, motorbikes and orange juice. Of those cars, just over half were exported by German auto makers. In September, Mercedes' parent company announced that it was investing $1 billion in its Alabama plant. Tariffs for those materials now stand at 25% in a move to protect local producers.

Most economists say the effect of higher worldwide import tariffs will drive up costs for consumers, offsetting much of the benefit of protecting domestic industries for the country imposing them.

Although auto tariffs would be aimed broadly at imports, with cars from major manufacturing hubs such as Mexico, Canada and Japan all likely to be affected, Trump has singled out German cars as the object of his ire. Shares US carmakers Ford Motor Co and General Motors Co also dropped.

New import duties will hit United States exports worth $235 million when they come into effect on August 4, government sources said.

"Of the 1.3 million German cars sold in the U.S., more than 800,000 were made on American soil". "The German automotive industry advocates talking to the United States despite the current hard situation in order to strengthen transatlantic relations and solve existing problems".

"If they decide to raise their import tariffs, we'll have no choice, again, but to react", EU Commission Vice President Jyrki Katainen told French newspaper Le Monde. The EU will now impose a 25 per cent tariff on all motorcycles above 500 cc which are being brought in from the United States.